2.01 Financial Literacy

Budget

A budget is a financial plan that includes income and expenses for a period of time, typically a month, quarter, or year.

Income

Income refers to what you earn. This can be cash or other earnings.

Expenses

Expenses refer to the costs that individuals pay as part of their regular activities or daily living. There are two types of expenses: fixed and variable.

Debt

Debt refers to something owed by one party to another, usually in the form of money. Debt is taken on with the understanding that it will be repaid in the future, typically with interest.

Saving

Saving money means setting aside a portion of your income for future use rather than spending it immediately.

Overspending

Overspending is when you spend more money than you can afford.

Debt Management

Debt management is a way to control your debt through budgeting and financial planning.

Emergency Fund

An emergency fund is a savings account or money set aside specifically to cover unexpected or unplanned expenses and financial emergencies. An emergency fund is not used to pay for vacations or other wants. Instead, it serves as a safety net to help deal with unforeseen financial setbacks without having to rely on credit cards, loans, or other forms of debt.

Spending Habits

Spending habits refer to the patterns and behaviors that individuals exhibit regarding their spending.

Financial Plan

A financial plan is a document or strategy that outlines an individual's or family's financial goals and strategies for achieving them. It serves as a roadmap for managing financial resources and making informed decisions to achieve financial security and meet long-term financial goals.